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Good morning to all new and old readers! Here is your Saturday edition of Faster Than Normal, exploring the stories, ideas, and frameworks of the world’s most prolific people and companies—and how you can apply them to build businesses, wealth, and the most important asset of all: yourself. 

Today, we’re covering Jim Simon and his journey to pioneering quantitative finance, transforming hedge funds, and dedicating his wealth to scientific and educational causes.

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What you’ll learn:

• How Jim Simons redefined wealth, science, and philanthropy

• Lessons on unconventional path, diverse team, and focusing on the signals

• Quotes on collaboration, risk-taking, and management

Cheers,

Alex

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Jim Simons: From Math Prodigy to Hedge Fund Legend

Jim Simons wasn't born into wealth. He grew up in a middle-class Jewish family in Brookline, Massachusetts. His father worked in a shoe factory. His mother was a housewife. From an early age, Simons showed an extraordinary aptitude for mathematics.

"I liked everything about math," Simons once said. "The only thing I thought about was [that] I would be a mathematician."

Simons blazed through his education. He earned his bachelor's in mathematics from MIT at 20. By 23, he had a PhD from Berkeley. His early career was promising but unconventional. He taught at MIT and Harvard. He worked as a codebreaker for the NSA during the Vietnam War.

But Simons wanted more. He saw an opportunity in the financial markets. He believed mathematics could be applied to trading in ways no one had tried before. In 1978, at age 40, he founded a hedge fund called Monemetrics.

The early years were tough. Simons struggled to make his mathematical models work consistently. He lost money. Investors complained. Many thought he was crazy to leave academia for this risky venture.

"Early on, he traded like others, relying on intuition and instinct, but the ups and downs left Simons sick to his stomach," wrote Gregory Zuckerman in his book on Simons.

Simons persevered. He hired brilliant mathematicians and computer scientists. They worked tirelessly to refine their models. In 1988, Simons launched the Medallion Fund. It was a turning point.

The Medallion Fund's performance was staggering. From 1988 to 2018, it generated $100 billion in trading profits. Its average annual return after fees was 39.1%. Simons had cracked the code.

"I don't want to have to worry about the market every minute. I want models that will make money while I sleep," Simons said. "A pure system without humans interfering."

Simons' success transformed the hedge fund industry. He pioneered quantitative trading strategies that are now widely used. His firm, Renaissance Technologies, became legendary on Wall Street.

But Simons didn't just accumulate wealth. He used it to make a difference. He and his wife founded the Simons Foundation, which has donated billions to scientific research. They've supported education initiatives and funded autism research.

"I did a lot of math. I made a lot of money, and I gave almost all of it away. That's the story of my life," Simons once said, summing up his journey.

His journey shows that with brilliance, determination, and a willingness to challenge conventional wisdom, it's possible to achieve extraordinary success and use it for the greater good.

Lessons

Lesson 1: Embrace the unconventional path. Don't be afraid to pivot dramatically in your career. Simons left a prestigious academic position to start a hedge fund with no prior finance experience. He saw an opportunity to apply mathematical models to markets in ways no one had tried before. This unconventional move led to extraordinary success. As Simons said, "I did something like nobody else was doing. I didn't want to do what everyone else was doing."

Lesson 2: Build a diverse team of brilliant minds. Surround yourself with the smartest people you can find, even if they don't have traditional backgrounds in your field. Simons hired physicists, astronomers, and cryptographers to work on financial problems. This diversity of thought led to novel approaches. As one Renaissance employee noted, "It's not his genius. It's his ability to manage genius."

Lesson 3: Focus on the signals, not the noise. Don't get caught up trying to explain every market movement. Simons and his team discovered that many profitable trading signals were non-intuitive or unexplainable. They focused on what worked, not why it worked. As Simons explained, "These trends and oddities sometimes happened so quickly that they were unnoticeable to most investors. They were so faint, the team took to calling them ghosts, yet they kept reappearing with enough frequency to be worthy additions to their mix of ideas."

Lesson 4: Create a culture of collaboration, not competition. Foster an environment where brilliant minds work together, not against each other. At Renaissance, employees were compensated based on the overall fund performance, not individual achievements. This encouraged information sharing and teamwork. A former executive said, "By Wall Street standards, Jim wasn't greedy. As a result, senior executives were generally content and did not engage in internal conflicts."

Lesson 5: Continuously refine and improve your models. Never stop iterating on your approach. Renaissance constantly updated and refined their trading models. They were willing to abandon strategies that stopped working and quickly implement new ones. As Simons put it, "We're always looking for new predictive signals. Always."

Lesson 6: Maintain a long-term perspective. Don't get discouraged by short-term setbacks. Simons faced numerous challenges in the early years of Renaissance, including significant losses. He persevered and continued to refine his approach. This long-term thinking ultimately led to extraordinary success. As he advised, "Some things take longer than you expect. If it's worth pursuing, stick with it."

Lesson 7: Use technology as a force multiplier. Renaissance invested heavily in computing power and data analysis capabilities. This allowed them to process vast amounts of information and execute trades at speeds that were unmatched by human traders. As one researcher explained, "What you're really modeling is human behavior. Humans are most predictable in times of high stress — they act instinctively and panic. Our entire premise was that human actors will react the way humans did in the past."

Most Effective Way To Learn

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Jim Simons Quotes

On collaboration: "You get smart people together. You give them a lot of freedom. Create an atmosphere where everyone talks to everyone else."

On risk-taking: "Don't be afraid to take risks and embrace failure. That's where the best opportunities often lie."

On management: "It's not enough to hire talented people and hope for the best. We also have to give them the freedom to do what they think is right."

On perspective: "I don't walk into the office in the morning and say, 'Am I smart today?' I walk in and wonder, 'Am I lucky today?'"

On timelessness: "The things we are doing will not go away. We may have bad years, we may have a terrible year sometimes. But the principles we've discovered are valid."

On passion: "I thought it was the coolest thing—what a life—to go out at two a.m. with friends and do math over coffee. It seemed like the world's greatest career."

On humility: "In this business, it's easy to confuse luck with brains."

On resilience: "I've always believed, if there's going to be a hit, take it and then go on about your business."

On anomalies: "We search through historical data looking for anomalous patterns that we would not expect to occur at random."

As Jim Simons said, "Do something new. I love to do something new, and I don't like to run with the pack." This week, consider how you can apply Simons' lessons to your work life.

On innovation:

• How can you step away from conventional thinking and explore uncharted territory?

On collaboration: 

• Have you sought out the best people to work with?

• How can you expand your network to include more talented collaborators?

Most Effective Way To Learn

Learning a little every day is one of the most important things you can do. Brilliant is designed to help you build a daily learning habit you’ll keep.

Brilliant’s suite of learning tools is designed by experts to be uniquely effective. Each lesson is bite-sized, so you can build real skills in minutes a day. This is math, data, and programming the way they should have been taught to you in the first place.

Join 10M+ users worldwide and begin your 30-day free trial today.

That’s all for today, folks. As always, please give me your feedback. Which section is your favourite? What do you want to see more or less of? Other suggestions? Please let me know.

Have a wonderful rest of week, all.

Recommendation Zone

⎯

Learning a little every day is one of the most important things you can do. Brilliant is designed to help you build a daily learning habit you’ll keep.

Brilliant’s suite of learning tools is designed by experts to be uniquely effective. Each lesson is bite-sized, so you can build real skills in minutes a day. This is math, data, and programming the way they should have been taught to you in the first place.

Join 10M+ users worldwide and begin your 30-day free trial today.

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